IP: Sony/Philips has trouble exporting Web TV's (fwd)

[Dave Farber <farber () cis upenn edu>]

Date: Sat, 2 Nov 1996 15:59:04 -0500 (EST)
From: v0!d <voidmstr () primenet com>


> From Electronic Buyers' News:


October 28, 1996
Issue: 1030
Section: News


CODE LIMIT EXCEEDED


By Jack Robertson


Washington - New Internet-television systems from Sony Corp. and
Philips Electronics Co. are technically munitions under U.S. export
controls and cannot be shipped to the companies' worldwide sales
networks, it was disclosed last week.


Sony officials said the company's TV set-top box designed by WebTV of
Palo Alto, Calif., includes a state-of-the-art 128-bit code encryption
system for electronic commerce. This far exceeds the 40-bit encryption
code permissible for export under the U.S. Munitions Control List.


Philips also makes a WebTV set-top Internet box at its Magnavox TV
plant in Knoxville, Tenn., and is similarly barred from shipping the
unit to sales channels around the world.


Both global electronic giants face immediate competition in the
emerging TV-Internet surfing market from other Japanese, South Korean,
and European set-makers that don't face the U.S. encryption
controls. They now join the U.S. computer industry, which has long
protested that the outmoded encryption export curbs are causing them
to forfeit overseas sales of PCs and workstations to foreign rivals.


President Clinton last month proposed lifting the level of encryption
export controls from the present 40-bit code word to 56 bits, but only
if a trap door is embedded in the cipher to allow law enforcement
agencies to decode wiretapped messages. Clinton is expected shortly to
sign an executive order putting the new control limits into effect.


The pending 56-bit-code threshold doesn't help the Sony or Philips
Web-surfing TV systems - nor most U.S. computer companies that build
systems with encryption exceeding even the new control limit. Both
Netscape and Microsoft Web-browsing software includes 128-bit code
encryption, surpassing export curbs.


Zenith Electronics Co., maker of a Web-surfing TV set, isn't concerned
about the encryption controls, since it sells only in the U.S. market
where the curbs don't apply.


Divicom Inc., based in Milpitas, Calif., must get an export license
from the U.S. State Department for every exported cable TV front-end
encoder, which includes 128-bit code word, according to Tom
Lookabough, the company's sales manager. He said the license review
process can take eight weeks or more, a troublesome delay that foreign
competitors don't face.


Divicom and Scientific Atlanta both said their new digital TV set-top
boxes include encryption that exceeds allowable export limits - but
virtually all sales so far are in the U.S. market. As digital-box
production ramps up, the companies would like to sell overseas, but
run into the export control ban that puts them at a severe
disadvantage against the foreign competitors aggressively entering the
set-top market.


President Clinton's encryption export control changes include an
industry-favored provision to take the category off the State
Department's Munitions Control List and shift responsibility to the
Commerce Department.








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